Are the budgetary announcements negatively disruptive for the capital and bond markets, or will they facilitate the objective of investments in the country?
The Union Budget for fiscal 2018 has a progressive outlook and encourages investments with initiatives like affordable housing being given infrastructure status to avail new funding avenues. The Budget has expanded the scope for the capital and bond markets. The various clarifications made on withholding tax for FPIs and external borrowing should foster a healthy investment climate. Apart from this, the government has indicated reduction of its borrowing while encouraging digital payments, which will help in bringing the market lending rates lower, leading to higher demand and improved credit off-take.

Has the Budget met the expectations of the capital and bond markets, in respect of policy corrections, giving a boost to the economy, manufacturing and infrastructure industries?
The Budget has helped the manu¡facturing sector by reducing the tax rate for MSMEs. The Indian manufacturing sector is dominated by MSMEs and they constitute 95 per cent of the companies in India by count. The reduction in taxation helps improve the competitiveness of the sector and aids growth.

With respects to infrastructure, the Budget increased the allocation to the sector by 11 per cent y-o-y - with higher allocation towards roads, urban infra and shipping. These were along the expected lines, and promise to boost investment in the sector.

These are the allocated increases for various sectors:
21 per cent increase in budgetary allocation for roads
23 per cent increase for Metro projects
20 per cent increase for Railways
21 per cent increase in budgetary allocation for the Sagarmala project
21 per cent decrease in budgetary allocation for Smart Cities
3 per cent increase in allocation for AMRUT.

What expectations do you place on the Union Budget to literally ease the cash flow for the Indian infrastructure sector specifically and the industry as a whole?
The cash flow problems could be eased for the infrastructure sector by:
1)Providing for time-bound resolution of arbitration process and payment by government bodies - something which
has been done through the 2015 amendment to the Arbitration Act. It needs to be implemented rigorously across departments.
2)Providing for timely payments by government bodies (Central and state) for the projects under construction - to ease the working capital of the companies and improve their cash flows.
3)Some tax benefits in the form of, say, extension of 80-IA benefit to upgradation/extension of the existing infrastructure facilities could help improve cash flows.

What were the infrastructure industry´s expectations from the Union Budget?
The infrastructure sector had the following expectations from the Budget:
Increased allocation - with special focus on roads, ports and urban infra;
Removal of MAT/DDT for BOT projects and/or SEZ units;
Increased allocation and visibility on flagship programmes like Smart Cities and inland waterways;
Provision for group tax filing for infrastructure companies with multiple SPVs;
Extension of 80-IA benefit to upgradation/extension of the existing infrastructure facility.

What did the infrastructure industry expect in terms of cargo tariff rates as well as infrastructure investments in the rail sector?
The industry expected the FM to layout a clear roadmap, to align the freight rates, in line with the other modes of transport (road, shipping) - providing them a level playing field. Higher allocations were expected towards network decongestion and upgradation of railway stations.

The affordable housing plans of the government are expected to boost infrastructure investments. How much has the Budget helped to bolster this policy and make it a reality?
Housing is one of the biggest job creators which can improve the capacity utilisation of the economy as a whole. The affordable housing segment is worth around Rs 2 lakh crore, and with the right impetus, can grow at 40 per cent CAGR over the next five-seven years. This can provide the biggest boost to capital spending and has a big multiplier effect for crowding-in of private investments. The boost provided by the Budget in changing the affordable housing limit from built-up area to carpet area and various fiscal incentives will help boost this sector.

Vineet Bhatnagar is the MD and CEO of PhillipCapital (India) & UAE and also manages the business affairs of other PhillipCapital group companies in India. He has more than 25 years of experience in banking, financial services and technology. This has allowed him to get an in-depth understanding of listed and OTC markets like equities, fixed income, currencies and commodities.